Royal & SunAlliance chief joins pounds 1m-a-year club

BOB MENDELSOHN, the American chief executive of Royal & SunAlliance, the storm-battered composite insurer, received more than pounds 2.3m last year making him the latest senior British executive to join the pounds 1m-plus a year club.

More than half of that was a one-off payment of pounds 1.28m to buy Mr Mendelsohn out of the long-term incentive scheme operated by Royal & SunAlliance in the United States where Mr Mendelsohn was chairman and chief executive officer before moving to London to head up the group worldwide at the end of 1997.

That still leaves Mr Mendelsohn with a salary plus bonus package of pounds 1.085m last year - a rise of 40 per cent on 1997, making him on one of the highest paid executives in the industry. Profits at Royal SunAlliance fell in 1998 by 40 per cent to pounds 602m pre-tax. The group's shares also underperformed the FTSE all-share index by 35 per cent last year.

Sir Peter Davis of the Prudential, Britain's biggest insurance company, earned pounds 1.5m last year but pounds 812,000 of that was in the form of shares awarded under the group's long-term incentive scheme and which he will not be able to touch until next year.

Mr Mendelsohn's pounds 1m package last year included a discretionary bonus of pounds 225,000 and expatriate benefits of pounds 190,000. But it does not include the award also made last year of options with a paper worth of pounds 687,000 or a further pounds 288,000 increase in accrued pension last year.

The company said that Mr Mendelsohn's remuneration is meant to "put him in a position, after taking into account taxation and living cost differentials where he is no worse off than were he to perform the same duties for the group in his home country [the United States].

In addition Mr Mendelsohn is entitled as from 1 January last year to a further incentive award of shares worth pounds 992,000 which he will be able to cash in in the event of certain criteria being met. These include a condition that over a three-year period growth in total shareholder return exceeds that of a basket of 12 leading UK, European and US insurers, and the share price rises by 5-20 per cent.